On 23rd October 2020 Ministry of Finance, Government of India issued direction to all lending institutions to implement Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020).
In view of the unprecedented and extreme COVID-19 situation, the object of the Scheme is to provide ex-gratia payment of difference between compound interest and simple interest by ways of relief for the period from 1st March 2020 to 31st August 2020 to borrowers in specified loan accounts. Such payment does not constitute a contractual, legal or equitable liability of the Central Government and is only an ex-gratia payment for a designated class of borrowers in view of the COVID-19 pandemic.
The ex-gratia payment under this scheme shall be applicable irrespective of whether the borrower had fully availed or partially availed or not availed the moratorium on repayment announced by RBI vide its circular DOR.NO. BP.BC.47/21.04.048/2019-20, dated 27.03.2020 and extended on 23.5.2020.
Under the Scheme launched by the Government of India on 23rd October 2020, the bank or lending institution will provide an ex-gratia payment to the borrower account, the difference between compound interest and simple interest for the period between from 1st March 2020 to 31st August 2020 (6 months / 184 days).
The ex-gratia payment will be applicable for -
The ex-gratia payment will be calculated basis the difference between compounding interest and simple interest for on your loan outstanding amount for 6 months or 184 days.
For example: If your Principal outstanding loan balance as on 29 February 2020 is INR 200,000 and the contracted Rate of Interest is 14.99%, then the ex-gratia amount will be calculated as below:
Contracted Rate as on 29 Feb'20 |
Principal balance as on 29 Feb'20 |
Start Date |
End Date |
No of Months |
No of days |
Compound interest |
Simple interest |
ex-gratia Payment |
14.99% |
INR 200,000 |
01-Mar-20 |
31-Aug-20 |
6 |
184 |
INR 15,598 |
INR 15,113 |
INR 485 |
If you have not received the ex-gratia payment, it may be due to multiple reasons,
If you do not have any open loan account with us at the time of the ex-gratia payment being credited, then we will credit the amount in your Savings account held with the bank.
If you have also closed your Savings account, then we will reach out to you on your last registered email id available with us, to obtain your other bank details.
Please note that it will take 7 working days to credit the ex-gratia payment amount, from the date of receipt of your other bank details and authorization instructions to credit the amount there.